Financial gift affect on CS


#1

Hi there,

My husband and I are planning on purchasing his childhood home from his mother at a significant discount. She is willing to sell us the house for 250K below fair market value. The ex-wife is bound to find out the financial deal we are getting as the sale price is public knowledge. Could this “gift of equity” that my mother-in-law is giving us affect my husbands current child support obligation?

Thanks!


#2

*** I’m not an attorney ***

I don’t think child support can be affected by the sale of property to you at a reduced amount if there is a provision in the separation agreement that you “may buy and sell real estate or any other property in the future without each other’s permission or the need to have them join in signing deeds or any other documents.” (The quoted part comes directly from my agreement with my ex.) It’s called a “Free Trader Agreement.” Child Support in NC is directly related to and calculated by using the parent’s income and the amount of time spent with the kids. Now whether or not the sale of the property and the profit from it later is considered income, I am not sure. Usually, it is. But best to let the attorney here answer that or you should consult with one.


#3

The child support guidelines include gifts in the definition of “gross income.” Usually, when income is received on a non-recurring basis, the court will enter a child support award for the special income based on ratio between the regular income and the obligation. In situations such as this, it would be hard to determine the amount of the gift since the true value of the gift would be based on what a willing buyer would purchase the house for. For the court to award her any child support for the gift, she would need to bring the gift to the court’s attention. If the gift is as substantial as you state, your husband should speak with a CPA to determine how much needs to be claimed on his taxes, and that would be a good figure to assume the court would use if asked to address the gift.